Presidential Executive Order on Economy in Government Contracting Foreshadows Likely Challenge to Supreme Court Decision on Union Neutrality

In Chamber of Commerce vs.. Brown (2008), the United States Supreme Court struck down a California statute that sought to indirectly regulate the labor relations policy of employers who received state funds by either prohibiting their use of those monies in their response union to organizing drives or, in the alternative, require proof that they were not so used, holding that such regulation violated free speech in the workplace rights protected by Congress in the National Labor Relations Act.

Executive Order 13494, released for public comment on April 14, will likely require the Supreme Court to revisit this issue. The Executive Order proclaims “the costs of the activities of preparing and distributing materials; hiring or consulting legal counsel or consultants, holding meetings (including paying the salaries of the attendees at meetings held for this purpose); and planning or conducting activities by managers, supervisors, or union representatives during work hours, when they are undertaken to persuade employees to exercise or not to exercise, or concern the manner of exercising, rights to organize and bargain collectively" to be “unallowable costs.” In so doing, the Executive Order will impose burdens similar to those previously struck down in Brown by either indirectly pressuring employers to remain “neutral” in organizing campaigns or, in the alternative, to, at their risk, attempt to segregate their expenses on organizing responses such that they can prove, under audit conditions, that they were not used to cover such costs.

The Executive Order comment period runs through June 12, 2010. It is anticipated that employers will seek to argue, as they did successfully in Brown, that such regulatory pressures, however nominally indirect, are an unlawful infringement of freedom of speech in the workplace.  

Editor's Note: Robert Fried served as counsel for a principal amicus for the employer position in Brown through oral argument.

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